7 Credit Score Myths That Are Costing You Money in 2026: What FICO Actually Cares About

# 7 Credit Score Myths That Are Costing You Money in 2026: What FICO Actually Cares About

> **Quick answer:** Most Americans are operating on dangerously wrong assumptions about their credit scores. The biggest myths — carrying a balance helps your score, checking it hurts it, closing old cards improves it — are not just wrong, they are actively costing you money. FICO cares about two things above all else: whether you pay on time (35%) and how much of your available credit you are using (30%). Everything else is secondary noise.

Your credit score is a three-digit number that lenders, landlords, and even some employers use to judge your financial trustworthiness. A difference of 50 points can be the gap between a 6.5% mortgage rate and an 8% one — translating to tens of thousands of dollars over a 30-year loan. And yet, credit score myths are so widespread that a 2024 survey by the National Foundation for Credit Counseling found that nearly 1 in 3 Americans still believe at least two major misconceptions about how their score is calculated.

Here are the seven myths that financial advisors say cause the most damage — and what FICO actually rewards.

## The FICO Formula: What the Algorithm Actually Weighs

Before debunking anything, you need to know the scoring breakdown. According to FICO's official documentation, FICO Score 8 — the most widely used version, relied upon by 90% of top U.S. lenders — breaks down as follows: